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5 Basics of Homestead Exemptions

In the most basic of terms, homestead exemption laws exist to protect someone’s primary residence from being sold in order to pay off unsecured creditors. These types of laws exist in many states. They are designed in such a way that they encourage people to invest in personal real estate as well as to encourage commercial lending.

1. How do Homestead Exemptions Work in Texas?

In the state of Texas, a homestead exemption refers to a partial exemption of taxes on property for the owners of the residence in question. There are qualifications that must be met such as owning and living in said property on the first day of the tax year. In many Texas jurisdictions, a great benefit of a homestead exemption is that the taxes due on the property in question can see a reduction of up to 20%. That being said, the amount of the deduction will vary from place to place. In order to get a homestead exemption, the property owner must file for it.

Once approved, you don’t have to keep applying each year. From time to time, the chief appraiser might request a new application, and, if that is requested, the property owner must comply.

2. What exactly is a Homestead Cap?

This can be defined as a limitation on what the assessed value of a homestead can be. This does not apply to the market value at all. It also does not apply to mineral rights values, personal property, investment property or homes and second residences. It applies only to the main residence.

This limitation is set at 10% per year, multiplied by the number of years since the last property appraisal added to the market value of the improvements that have been made since the most recent appraisal. Please note that maintenance is NOT considered to be an improvement.

If all of that sounded like a bunch of unintelligible malarkey, and you happen to be in the Ft. Bend appraisal district, the Waller County appraisal district, the Harris County Appraisal District, then you have help available.

3. What is considered to be a Homestead?

In the state of Texas, a homestead is a separate structure, mobile home or condo that is located on land, which is either leased or owned if the individual living in it is the owner. Any Texas homestead can include land of up to 20 acres, but only if that land is used either as a yard or in whatever kind of purpose that is related to residential use.

4. How do you get a Homestead Exemption?

In order to get a homestead exemption, the owner of the homestead in question must file the application for residential homestead exemption at the county appraisal district. This can be done between January 1 and the end of April during the tax year, and can be done up to a year after the taxes are due. As of September 1, 2017, the time has been increased to up to 2 years after the tax delinquency date. 

During that year, if the owner of the homestead turns 65 or somehow becomes disabled, there is a different type of exemption application that should and must be filed within one year of the date of qualification. As of September 1, 2017, the time has been increased to up to 2 years after the tax delinquency date. 

5. There are a variety of types of exemptions for which you can apply. Some of them are as follows:

  • School taxes – Each residence homestead owner is eligible for a $15,000 exemption from the value of the home for school taxes.
  • Age 65 and over or disabled exemptions – These residence owners can qualify for an additional $10,000 for school taxes on top of the $15,000 exemption. If the home owner is both over the age of 65 AND disabled, he cannot claim for two $10,000 exemptions but can choose to claim for age OR for disability.

These are just 2 examples of the types of homestead exemptions. There are also exemptions for county taxes, optional percentage exemptions and an additional optional disabled or over 65 exemptions.

If you still need to file you Homestead, download the form HERE.

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Blog Author

Patrick O’Connor, MAI, Owner and President
Patrick O’Connor has been active in reducing property taxes, providing expert witness testimony and appraising commercial real estate property since 1983. Pat is active in publishing analyses and data with respect to the real estate market, while being a highly regarded media spokesperson for the real estate community. He holds a MAI, the highest achievable designation from the Appraisal Institute, and is a licensed senior property tax consultant. Pat earned a Master of Business Administration from Harvard University. In 2001, he authored the first definitive consumer guide to Texas property taxes, Cut Your Texas Property Taxes.

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